[Will88]

Japan blames this mess on a strong Yen and Thailand’s worst flooding in almost 70 years. The flooding crippled the output in Southeast Asia of Japanese companies such as Sony Corp. and Honda Motor Co.

It seems most every industrialized nation that has exported many of its manufacturing plants and jobs to cheap labor nations ends up with a mushrooming debt problem.

[Eric in the Ozarks]

This could be why Honda is building three new assembly plants in the US...

[spokeshave]

This is the third article this morning that rates a "deflation ping"

scary.

[GonzoGOP]

It seems most every industrialized nation that has exported many of its manufacturing plants and jobs to cheap labor nations ends up with a mushrooming debt problem.

Farming and industry create wealth. The value of the output is greater than the value of the input and labor. All other fields of endeavor just take a cut.

This is not always a bad thing. Transportation for example moves goods from where they are produced to where they are needed, taking a cut for the essential service provided. However many cut takers provide non essential services, simply keeping track of what the wealth producers are doing, but not actually helping the process along. At first these are necessary, the shipping clerk, the guy in the mail room, an accountant to make sure everyone gets paid.

However as time goes on the amount of this dead weight on the system increases to a point it can no longer be sustained. Either because of excess regulation, and the legions of bureaucrats it spawns, or the departure of industrial base. In our case we suffer from both. Because farming and especially industry create a lot a value you can support a lot of cut takers for every value producer. But at some point there isn't enough industry to support the cut takers. Then comes the debt to keep the system running and the bureaucrats employed.

[KoRn]

"It seems most every industrialized nation that has exported many of its manufacturing plants and jobs to cheap labor nations ends up with a mushrooming debt problem."

Attempting to replace real growth/production with debt? Probably looks great for a few years. Long enough to win a few elections, inflate stocks, increase housing prices, and increase bonuses for corp executives. Then the party ends, which is where we find ourselves today.

[gogogodzilla]

The real issue that wasn’t addressed in this article is demographic. Japan’s population is aging fast and shrinking.

It’s to the point where the Japanese government is encouraging people to move to more populated areas as entire villages being to die off. All the young left for work in the cities and the rest die, one by one, of old age.

And it’s just going to get worse, as their young adults aren’t having children, either.

And without an expanding workforce, they cannot have economic expansion within Japan, as they’ll need to wring more productivity out of fewer workers just to break even.

Couple that with the governmental costs associated with the elderly and retirement... and you end up with a government that pays it’s bills with debt. For they can’t get enough money out of the remaining workers to pay for the costs generated by the elderly.

That said, I think that Japan is banking on the elderly continuing to follow their old habit of buying Japanese bonds into retirement... that way the elderly will pay for the government to care for them. And then die off before the bonds mature.

[Attention Surplus Disorder]

“It seems most every industrialized nation that has exported many of its manufacturing plants and jobs to cheap labor nations ends up with a mushrooming debt problem.”

A statement profound in its implications, but (sorry!) not Nobel prize material. It goes back to the creation of true wealth versus credit. Also relates to balance of payments and a whole lot of other things. It works for a while...